“Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: Crackdown on Crypto Ads; Biden Nominates William Brodsky; Greenwood Project Expanding Outreach
Options News Script
This week… The markets were closed for MLK Day, Regulators are cracking down on crypto ads, President Biden nominates William Brodsky, and the Greenwood Project is expanding its outreach.
This is Alex with John Lothian News, and this is your recap of options news from the week. Here’s some of the week’s top stories, starting with:
1– UK, Spain, Singapore to crack down on ‘misleading’ crypto ads as prices remain under pressure
[Crypto] Regulators are cracking down on cryptocurrency advertisements across the globe to protect investors. Britain, Spain, and Singapore are some of the countries taking action to curb misleading advertisements. With the ever-growing popularity of cryptocurrency… comes increased ad campaigns, and regulators are wanting to ensure that the ads are also warning investors of the risks involved. Last week, celebrities Kim Kardashian, Floyd Mayweather, and others were sued for alleged cryptocurrency-related fraud, including making alleged misleading statements about EthereumMax through social media. In light of this, the news site Kitco reports that for any social media influencers in Spain, ads that can reach over 100,000 people should first be run by the country’s National Securities Market Commission (CNMV), which is Spain’s version of the SEC. Meanwhile, The Monetary Authority of Singapore will also set limitations for public ad appearances in newspapers and social media. As for the United Kingdom, Kitco says that the Finance Ministry will start holding crypto ads to the same regulatory levels…as stocks and insurance products.
2– Biden nominates William Brodsky
In the midst of setting limitations, the U.S. government is casting nominations. This week, President Biden named former CEO of the CBOE and the CME William Brodsky as a nominee for Member of the Securities Investor Protection Corporation. Brodsky is currently the chairman of the company Options Solutions, a specialized asset management firm that uses option-based strategies. Not only is he chairman of Cedar Street Asset Management and a Trustee of Syracuse University…but he’s also Biden’s old law school classmate.
3– Exegy Announces Record Sales Growth in 2021
In other news, the financial service company Exegy saw lots of growth in the past year, as they reported an addition of “15 new clients in the fourth quarter, delivering 48% growth from Q3 and 55% revenue bookings growth compared to the same period last year.” JLN sat down with Exegy late last year to discuss the company’s merger with the software company, Vela Trading Systems.
4– MIAX Exchange Group Sets Multiple Volume and Market Share Records; MGEX Sets Annual Futures and Options Volume Records
The MIAX Exchange Group also got in on the record-setting when it announced that it collectively traded 1.34 billion multi-listed options contracts in 2021, a whopping 61.8% increase from 2020. The news doesn’t end there, because the Minneapolis Grain Exchange (MGEX) -which is also owned by MIAX- reported an options volume of over 123,000 contracts in 2021, which MGEX says is a 246% increase from 2020, and the highest annual volume total ever.
5– The Greenwood Project Partners with Citadel and Citadel Securities to Expand High School FinTech Program
Finally, the Chicago-based nonprofit The Greenwood Project is expanding its outreach, efforts, and partnerships after announcing a collaboration with Citadel and Citadel Securities this week. The nonprofit strives to help young students of color in their professional journeys by placing them in internships and other environments within the finance industry. PR Newswire says that the summer FinTech Institute will serve 60 high school students in 2022… while “teaching financial literacy through coding with exposure to both the stock market as well as the coding languages Python and R.” Greenwood Project Scholars will work directly with Citadel and Citadel Securities teams to provide exposure to the Financial Technology sectors.
That’s all for now over here, but tune in for this week’s edition of John’s Take. Also, be sure to check out a previous “Options Term of the Week”, where TASTYTRADE’S JERMAL CHANDLER EXPLAINS WHY YOU SHOULD KEEP A CLOSE WATCH ON GAMMA.
THIS HAS BEEN ALEX PERRY FOR JLN. THANKS, AND WE’LL SEE YOU NEXT TIME.
John talks with Barchart’s Mark Haraburda for “John’s Take”
John's Take Script
Futures exchanges are hot commodities, to borrow a line from investor Jim Rogers. I have always said our futures markets were the “World’s Best Markets.” So there is that too.
This week, as Alex Perry reported, Coinbase bought FairX, a JLN sponsor. The deal is expected to close in late March.
All the way back on December 1, 2021, Crypto.com announced it was buying Nadex and the Small Exchange from the IG Group.
Then in October, Cboe joined the party and bought Eris Digital Holdings, LLC, known as ErisX, which operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearing house.
On August 31, 2021, FTX.US, the fast-growing crypto currency exchange founded by Sam Bankman-Fried, the only man besides Facebook’s Mark Zuckerberg to get so rich before the age of 30, bought LedgerX LLC, a Commodity Futures Trading Commission (CFTC)-regulated digital currency futures & options exchange and clearinghouse.
Just over two years ago, in December of 2020, this run on futures exchanges started when Miami International Holdings, Inc, the parent company of the MIAX Exchange Group, closed the deal buying the Minneapolis Grain Exchange.
What all of these deals have in common is plans to leverage these existing exchanges and clearing houses in some cases for greater opportunities than the stand alone exchange could ever hope to develop. Some are crypto exchanges trying to break into traditional derivatives trading and maybe get a little whiff more of legitimacy to help attract institutions to their game.
Others are traditional players trying to hedge their bets by offering something in the crypto world in case this bubble turns out to be really a mylar balloon with staying power.
MIAX, who started it, so far seems content to offer innovative traditional derivatives products, assuming that is not too much of an oxymoron.
There is also the small contracts angle, as Nadex, Small Exchange and FairX all offer smaller sized contracts popular with retail traders today.
I decided to take a look at the CFTC website to see who is left to buy. The page you want to look at is the Trading Organizations – Designated Contract Markets page.
There are four different statuses of exchanges: Pending, Designated, Vacated and Dormant. Designated means the exchange has an active license. That does not mean it is trading, though, or maybe not much. The Bitnomial Exchange trades bitcoin futures. It has open interest of 9 contracts and volume today was 10.
The Cantor Exchange LP is gearing up to trade once again and this time it is not movie receipts, which were outlawed by Dodd-Frank. Its markets are “currently unavailable,” its website says.
Some of the pending exchanges are new crypto enterprises trying to get registered, like Gemini Titan, LLC.
There is the new designated exchange, Kalshi, which has former CFTC Commissioner Brian Quintenz on its board.
There is the Los Angeles Grain Exchange, designed in 1922 and vacated in 1953 with its last trade in 1945.
And there is a dormant exchange, the Merchants Exchange, that was once the Merchants Exchange of St. Louis. Its history goes all the way back to 1836. If there were one dormant exchange I would want to see come to life in this current run on small exchanges, it would be the Merchants Exchange with its long history.
But for now, it looks like we are going to have to go back to having to file with the CFTC for new exchanges, as we are mostly out of existing, designated ones to buy. This means instead no more buying past the time delay friction brought to regulators by your competitors. That means no more buying someone else’s hard regulatory filing work. That means no more buying someone else’s good reputation. Now new exchanges are going to have to earn good reputations the old fashioned way. Actually, this is the way it ought to be.
Term of the Week
“GAMMA” with Jermal Chandler